Ans. A prudentfinancial management is helpful to make a capitalstructure whichis sound. Our aim will reduce So, we can easily repay this fund out of our profit. If we willfinance fixed assets out of short term fund, it may be risky because if we willnot pay this fund on its maturity, we can not carry our business long and we can not also sell our fixed asset in very short time.
The result maycome in the form of insolvency of business. So, we never take any solvency riskand try to understand the importance of financial management.